Section 129 of the Central Goods and Services Tax (CGST) Act, 2017, deals with the detention, seizure, and release of goods and conveyance in transit. This section outlines the procedures and rules that govern the actions the tax authorities can take when they suspect tax evasion or non-compliance during the transportation of goods. We provide a detailed explanation of Section 129, including its key provisions, rules, and examples.
Key Provisions:
1. Detention of Goods and Conveyance: Under Section 129(1) of the CGST Act, if the proper officer (tax authority) has reasons to believe that any goods are being transported in contravention of the provisions of the Act or Rules, they may detain both the goods and the conveyance (vehicle) that is transporting them.
Example: If a truck is found transporting taxable goods without the required e-way bill or proper documentation, the tax officer may detain both the goods and the truck.
2. Notice and Order: The proper officer, after detaining the goods and conveyance, must issue a notice within seven days explaining the reasons for detention and providing an opportunity for the owner of the goods or the conveyance to be heard.
Example: If goods are detained due to discrepancies in the invoice or e-way bill, the tax officer must issue a notice to the transporter or consignee explaining the grounds for detention.
3. Release of Goods: Under Section 129(2) of the CGST Act, if the owner of the detained goods or the person in charge of the conveyance pays the applicable tax and penalty or furnishes a security for the same, along with any applicable interest, the goods and conveyance may be released.
Example: If the tax and penalty amount to Rs. 10,000 for detained goods, the owner can pay this amount to secure the release of the goods and the vehicle.
4. Provisional Release: Section 129(2) also allows for provisional release of goods and conveyance upon execution of a bond and furnishing of a security, if the tax and penalty amount is in dispute.
Example: If the transporter disputes the tax and penalty amount and provides a security equivalent to the disputed amount, the goods and conveyance can be provisionally released.
5. Final Order: After considering the owner’s representations, if the proper officer is satisfied that the goods were detained without valid grounds, they shall release the goods and conveyance, as per Section 129(3).
Example: If it is found that the goods were detained due to a misunderstanding or incorrect interpretation of the law, the officer must release the goods.
6. Penalty on Owner or Person in Charge: If the owner of the goods or the person in charge of the conveyance fails to pay the tax and penalty or furnish a security as required, the goods may be sold to recover the dues, and a penalty equivalent to the tax due or Rs. 25,000 (whichever is less) may be imposed under Section 129(5).
Example: If the owner of detained goods fails to pay the tax and penalty, and the tax amount is Rs. 15,000, a penalty of Rs. 15,000 may be imposed.
Relevant Rules: 142, 144A and 154
Supported Case Laws:
1. Hon’ble Madras High Court in the case of M/s. MSJ Leathers v. The State Tax Officer: In this case, their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 is not justified if the tax and penalty have already been paid or furnished as security.
2. Hon’ble High Court of Rajasthan in the case of M/s Mohit Minerals Pvt. Ltd. v. State of Rajasthan– their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 cannot be made without providing an opportunity of being heard to the person concerned.
3. Hon’ble Punjab and Haryana High Court in the case of Kamaljeet Singh v. State of Punjab: Their Lordships held that the detention of goods under Section 129 of the CGST Act, 2017 is justified if the proper officer has reason to believe that there has been a contravention of the provisions of the Act.
6. Hon’ble High Court of Karnataka in the case of M/s VRL Logistics Limited v. The Assistant Commissioner of Commercial Taxes: their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 can be made only if there is prima facie evidence of a contravention of the provisions of the Act.
7. Hon’ble High Court of Rajasthan in the case of M/s Rajasthan State Beverages Corporation Ltd. v. Assistant Commissioner, Commercial Taxes: their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 can be made only if the person transporting the goods does not produce the necessary documents or furnishes incorrect information.
8. Hon’ble High Court of Kerala in the case of M/s DSV Air and Sea Pvt. Ltd. v. State of Kerala: their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 can be made only if the proper officer has reason to believe that the goods are liable to confiscation.
9. Hon’ble High Court of Rajasthan in the case of M/s Ratan Stone Export v. Union of India: their lordships held that the detention of goods under Section 129 of the CGST Act, 2017 is not justified if the person transporting the goods produces the necessary documents and pays the tax and penalty.
These case laws provide guidance on the interpretation and application of Section 129 of the CGST Act, 2017, and illustrate the various factors that may be considered by the courts in determining whether the detention or confiscation of goods or conveyances is justified under the Act.
It is important to note that these case laws are not exhaustive, and the interpretation and application of Sections 129 of the CGST Act, 2017 may vary depending on the specific facts and circumstances of each case.
Summary: Section 129 of the CGST Act empowers tax authorities to detain and seize goods and conveyances during transit if they suspect non-compliance. However, the law also provides for due process, including issuing notices, hearing representations, and releasing goods upon payment of tax and penalty. Failure to comply with these provisions can result in penalties and even the sale of detained goods.
It’s crucial for businesses and transporters to ensure compliance with GST regulations to avoid delays and penalties during the transportation of goods. Understanding Section 129 and its implications is essential for smooth and lawful transportation of goods under the GST regime.
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